Agreement Rate Calculations - Background

Rate calculations

Agreements, when read together with social security law, determine the rate of Australian payments under the agreement. In some cases the income test concessions contained in an agreement can be extended to those pensioners who are paid autonomously, but not to a pensioner paid under another agreement.

The rate of Australian pension paid to people living 'outside Australia' can be calculated in one of 2 ways:

  • under ONE of Australia's social security agreements, or
  • under Australia's domestic portability legislation (7.1.1).

The rate of Australian pension paid UNDER AGREEMENTS is calculated in one of 2 ways:

  • the proportional rate (for people residing outside Australia), or
  • the direct deduction rate (for people residing inside Australia).

Some agreements allow for a comparison between the proportional rate and the direct deduction rate to be made for people residing inside Australia. The person is then paid the higher of the 2 rates.

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